There is a growing consensus that while oil prices remain depressed, the supply glut is giving way to market balance. But if non-OPEC production continues to decline as it is, the new concern is that any equilibrium between supply and demand will be short-lived.

Paal Kibsgaard, chief executive officer of Schlumberger, said the industry has reached the bottom of the downturn cycle and must begin investing again in order to keep the pendulum from swinging too far the other way.

“There is no way you can maintain medium- and long-term supply capacity with half the investment—it just doesn’t work,” he said, adding that oil markets are facing a supply crunch within 2 years if the industry does not increase spending quickly.

Kibsgaard gave his remarks Monday morning on a panel session at the SPE Annual Technology Conference and Exhibition in Dubai where executives and technical experts have gathered to discuss the future of their industry.

As more money comes off the sidelines and into play, Kibsgaard emphasized that it needs to be spent more wisely than before. That will require service companies and operators to form tighter relationships when it comes to designing new technologies that will substantially lower finding and lifting costs.

Kibsgaard said greater collaboration must also involve moving away from the practice of developing individual technology components and “toward developing complete technology systems, including all aspects of hardware and software.”

As examples, he cited Schlumberger’s development of a new integrated land rig system and its recent acquisition of Cameron International, a deal aimed at marrying the two firms’ surface and subsurface capabilities.

Also on the panel was Martin Craighead, chief executive officer of Baker Hughes, who echoed the need for increased spending, which he said “will allow the industry to maximize growth opportunities and become more resilient in the downturns of the future.”

He highlighted several technologies that will benefit from a new wave of investments, ones that he said also will define the future of his company. Those technologies include 3D printing, material sciences, automation, and sensors.

He said of the latter, “Advances in sensors and networking are embedding intelligence into every piece of hardware, creating a new metasystem that is changing the way tools, as well as materials, interact with each other.”

Craighead also discussed the importance of investing in new mindsets. He said in an effort to capture some of the inspiration that has driven the rapid growth of the US software sector, the company opened a technology center in Palo Alto, California, USA—aka Silicon Valley.

“You have a Baker Hughes office in Palo Alto and nobody knows what the heck that is, certainly none of the Google, Apple, or Yahoo people,” he said. “But it was about embedding our folks out there in that culture to experiment fast, learn fast, and fail fast.”

That willingness to fail and move on, he noted, is what made the US shale revolution possible and is now what the rest of the oil and gas industry needs to embrace if it is to become a more sustainable business.